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What is innovation?

April 1, 2012

I’ve come to pretty much despise the word “innovation.”

First of all, it’s painfully overused, whether you work in finance or a start-up.

In finance, when people complain that banks and hedge funds should be regulated because they take dangerous risks that they don’t understand and that taxpayers have to backstop, the response, typically from a chorus of business professors and economists, is “don’t over-regulate, you might stifle innovation!”

Never mind that if you dig down to what is meant by financial innovation, it usually consists of creating weird mathematical instruments or contracts that require a complicated computer algorithm to price. So, pretty much the stuff that gets us into weird messes in the first place.

If I needed to write a sign to sum this up, it would read something like “Please stifle financial innovation!”. Actually, Volcker said it best: “the only useful banking innovation was the invention of the ATM.”

As it’s used in start-ups, the word “innovation” is also mostly painful to experience. For the most part it’s baldly used as a buzzword, by someone with a spiffy presentation who is clearly not himself (or herself, don’t want to be sexist) planning to be innovative.

In such a buzzword context, innovation becomes meaningless. At best, it’s their attempt to encourage and cajole the people around them to be innovative, and then perhaps take credit for such innovation. At worst, they fetishize Steve Jobs, which usually means channeling his perfectionist asshole side, thinking that may spur extra innovation.

What’s particularly sad about the abuse of this word is that it is inherently meaningful, and that I see and read about true innovation every day, mostly gone unnoticed by the spin doctors. Maybe that’s because most of it is too technical for business guys to get their heads around.

Another thing I’ve noticed, is that usually the most innovative people are also the most high maintenance pain-in-the-ass people to work with. Sometimes (often) downright hostile in fact.

I’ve come to enjoy this phase of “creative hostility” as a way of getting through skeptical or openly suspicious questioning incredibly efficiently. If I propose something and my most innovative, hostile critics immediately jump down my throat, that’s a sign my idea was a good one. I know that sounds weird but it’s true.

Actually maybe it’s not so weird. I watched this TED talk by Brene Brown where she talks about shame, vulnerability, and innovation. You should watch it, it’s only 20 minutes and it’s good.

Specifically, she talks about how, in order to be innovative, one must make oneself vulnerable. Even though she didn’t have time to really argue this, it resonates with me. The most innovative moments I’ve experienced are when everyone involved is willing to be wrong (vulnerable) and to smell each other’s bullshit (skeptical). Opening yourself up to other people’s skepticism takes courage.

She also describes how cultural norms can come into play at moments of shame or vulnerability or courage. In particular, this thing where men cannot be seen as weak. I think it explains why, when I see innovation, I also tend to see overt displays of macho behavior.

I wouldn’t have it any other way. I say that because I’m pretty sure the alternative is passivity and indifference, which is totally unappealing.

Here’s what I think. Real innovation is a mess and brings up all sorts of things that people don’t actually want to talk about. That’s why we only hear about some watered-down a posteriori description of it.

Categories: rant
  1. April 1, 2012 at 2:16 pm

    Backing up a bit, for the moment, from financial “innovation,” in the world of patents innovation involves commercial success, whereas “invention” merely involves novelty, which can include the vast majority of vanity patents, relegated to never being exploited. However, commercial success can be faddish, fleeting, and soon forgotten — hardly real innovation. The concept of “disruptive” seems more useful a distinction to establish a true innovation.

    With financial innovation, utility seems highly dependent on whether the norms assumed (i.e. the normal bell curve) are applied in a valid regime — which is invariably near the means, the averages, in smooth, nonvolatile markets far from the fat tails wherein financial engineering is swimming in complete ignorance and disaster.


  2. April 2, 2012 at 6:42 am

    Whate gets me is that innovation has positive shading in our culuture/vocabulary; although realistically innovations can be good as well as bad (think IG Farben, Teller etc..)


  3. April 5, 2012 at 2:28 pm

    Glad to someone else bringing up this question. The buzzword nature of the way that we talk about innovation in the startup context has totally destroyed our understanding of what it really is and how rare it is. Wrote about is last year, FYI:



  4. April 12, 2012 at 3:07 pm

    This is great, and I’m glad someone is saying it! I have noticed the same problem in teaching/classroom work as well, where innovation is certainly quite messy and difficult to deal with.


  5. araybold
    April 14, 2012 at 11:00 am

    You cannot effectively counter bogus or simplistic arguments by deprecating the language subverted in their making. The most reasonable responses are counter-arguments and the debunking of fallacies, though for truly ridiculous ideas, ridicule is best, as it avoids vesting those ideas with a spurious validity by appearing to take them seriously (this is why John Stewart is relevant – didn’t you ask about that in a previous post?)


  1. April 12, 2012 at 11:58 am
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